Feb. 20 (Bloomberg) -- The relationship between Facebook
Inc. and WhatsApp Inc. started in spring 2012 over coffee at a
German bakery. It was consummated on Valentine’s Day with
chocolate-covered strawberries, after just five days of talks.

Facebook, the world’s largest social network, agreed
yesterday to acquire mobile-messaging startup WhatsApp for as
much as $19 billion in cash and stock, seeking to expand its
reach among users on mobile devices.

Mark Zuckerberg, Facebook’s chief executive officer, first
reached out to WhatsApp CEO Jan Koum in early 2012, inviting him
for coffee at the bakery in Los Altos, California. They ended up
talking for more than two hours, according to a person with
knowledge of the matter.

The two became friends, meeting frequently for dinners and
hiking together.

On Feb. 9, Koum, 38, went to Zuckerberg’s house in Palo
Alto, California, for dinner. That’s when the conversation about
a possible deal became serious, the person said. The two first
talked about how they could work together more closely on
Zuckerberg’s Internet.org initiative for connecting the world on
mobile devices.

Zuckerberg, 29, then proposed that their companies join
together and that Koum join Facebook’s board. Koum took a few
days to think it over. Five days later, on Feb. 14, Zuckerberg
was having dinner with his wife at home when Koum showed up,
strawberries in hand. They then negotiated a price.

Biggest Deal

The purchase would be the biggest Internet deal since Time
Warner’s $124 billion merger with AOL in 2001, according to data
compiled by Bloomberg. The accord includes $12 billion in stock,
$4 billion in cash and $3 billion in restricted shares, Facebook
said yesterday. WhatsApp has more than 450 million members, with
1 million users being added daily, Facebook said.

The shares of Menlo Park, California-based Facebook rose
1.8 percent to $69.30 at 3:05 p.m. in New York.

Mountain View, California-based WhatsApp, which is popular
in Europe, lets users send messages through its service on
mobile devices based on different operating systems including
Apple Inc.’s iOS, Google Inc.’s Android, Microsoft Corp.’s
Windows Phone and BlackBerry Ltd.’s software.

Google also expressed interest in acquiring WhatsApp, two
people with knowledge of the matter said. Tim Drinan, a
spokesman for Google, declined to comment on an offer.

Unlike traditional text messages, which consumers pay for
through their mobile-phone plans, WhatsApp is free for the first
year and costs 99 cents a year after that. It competes with
Tencent Holdings Ltd.’s WeChat in China, KakaoTalk in South
Korea and Line in Japan, as well as Facebook’s own application,
Facebook Messenger.

Food Stamps

Koum co-founded the company with Brian Acton, 42, in 2009
after almost a decade as an engineer at Yahoo! Inc. Venture
capital firm Sequoia Capital invested $8 million in WhatsApp in
2011, for a more than 15 percent stake that is now worth about
$3.5 billion, according to people with knowledge of the deal.

Koum’s likely windfall from the deal stands in stark
contrast to his years as a teenager, when his family relied on
food stamps after emigrating from Ukraine.

Acton grew up in Michigan and was employee No. 44 at Yahoo,
working on advertising, shopping and travel services, according
to Wired. He later hired Koum at Yahoo and served as his mentor,
inviting him over to his house and taking him skiing, Forbes
said.

Yahoo Rejection

Acton said Facebook turned him down for a job in an August
2009 Twitter post. He introduced WhatsApp the same year.

“Looking forward to life’s next adventure,” he wrote.

The two founded WhatsApp with the idea that smartphone
users should be able to easily message each other without
incurring fees from phone carriers. They eschewed marketing and
didn’t employ a public relations person, relying on the word-of-mouth recommendations of its users instead.

Koum said in a statement on the company’s website that
WhatsApp will remain autonomous and operate independently.

“There would have been no partnership between our two
companies if we had to compromise on the core principles that
will always define our company, our vision and our product,” he
said.